Ma Mannheim Corporation is ready to emerge from Chapter 11 bankruptcy under a reorganization plan accepted by all parties. Mannheim's balance sheet shows: Various assets $2,000,000 Prepetition liabilities, fully secured $400,000 Prepetition liabilities subject to compromise 1,360,000 Postpetition liabilities 820,000 Common stock 200,000 Retained deficit (780,000) TOTAL $2,000,000 TOTAL $2,000,000 There are no excess assets. The present value of future cash flows from the reorganized company's operating assets is $1,900,000 The creditors represented by the prepetition liabilities subject to compromise agree to take $580,000 in 7 percent notes payable plus 70 percent of the common stock as settlement. The old shareholders will have 30 percent of the common stock. After reorganization, Mannheim's retained earnings balance is Select one: a. $150,000 b. $(70,000) c. $500,000 d. $0.
Ma Mannheim Corporation is ready to emerge from Chapter 11 bankruptcy under a reorganization plan accepted by all parties. Mannheim's balance sheet shows: Various assets $2,000,000 Prepetition liabilities, fully secured $400,000 Prepetition liabilities subject to compromise 1,360,000 Postpetition liabilities 820,000 Common stock 200,000 Retained deficit (780,000) TOTAL $2,000,000 TOTAL $2,000,000 There are no excess assets. The present value of future cash flows from the reorganized company's operating assets is $1,900,000 The creditors represented by the prepetition liabilities subject to compromise agree to take $580,000 in 7 percent notes payable plus 70 percent of the common stock as settlement. The old shareholders will have 30 percent of the common stock. After reorganization, Mannheim's retained earnings balance is Select one: a. $150,000 b. $(70,000) c. $500,000 d. $0.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Ma
Mannheim Corporation is ready to emerge from Chapter 11 bankruptcy under a reorganization plan accepted by all parties. Mannheim's
| Various assets | $2,000,000 | Prepetition liabilities, fully secured | $400,000 |
| Prepetition liabilities subject to compromise | 1,360,000 | ||
| Postpetition liabilities | 820,000 | ||
| Common stock | 200,000 | ||
| Retained deficit | (780,000) | ||
| TOTAL | $2,000,000 | TOTAL | $2,000,000 |
There are no excess assets. The present value of future
After reorganization, Mannheim's
Select one:
a. $150,000
b. $(70,000)
c. $500,000
d. $0.
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